Commodity Corner

Views on commodities and energy

from Global News Journal:

Can export bans be challenged at the WTO?



Russian grain harvest

Russia’s ban on grain exports as a heat wave parches crops in the world’s third biggest wheat exporter has raised questions whether such export curbs break World Trade Organization rules. Russia is not a member of the WTO, and it remains to be seen how its new grain policy will affect its 17-year-old bid to join. But other grain exporters, such as Ukraine, which is also considering export curbs, are part of the global trade referee.

WTO rules are quite clear that members cannot interfere with imports and exports in a way that disrupts trade or discriminates against other members. But in practice most WTO rules aim to stop countries blocking imports – shutting out competitor’s goods to give their own domestic producers an unfair advantage.

WTO protest



Saudi Arabia and other members of the oil cartel OPEC (not all of whom are members of the WTO) routinely control the production and hence export of oil to defend target prices, but have not faced challenges at the WTO.

What can be challenged are restrictions on exports designed to hurt competitors. The United States, European Union and Mexico are currently suing China at the WTO over Beijing’s export duties and other restraints on raw materials. They argue that these make the raw materials more expensive for foreign competitors, putting them at a disadvantage to Chinese processors.

from MacroScope:

Argentina set for wheat windfall

Not everyone is upset about the 50 percent surge in wheat prices over the past month.

Wheat's rise to 2-year highs was caused first by heavy rains in Canada and now by a Russian export ban that was triggered by its worst drought in decades. There are floods in Pakistan, another major wheat grower. But while the wheat market shenanigans are triggering much hand-wringing across developing nations, Argentina, one of the world's top seven wheat exporters, may be set for a windfall.

Beef off menus, on agenda in Argentina


If there’s one thing that gets Argentines hot under the collar, it’s rising beef prices, so it’s not surprising that surging costs at the butcher shop are ringing alarm bells at the presidential palace.
    Local TV stations are reporting a collapse in sales and some angry steak lovers have even set up a Facebook group to promote a one-week beef-eating strike. Some cuts have gone up by as much as 50 percent since the start of the year, according to local media, forcing government officials to play down the hikes as a temporary blip and blame their old enemies — the farmers.
    Economy Minister Amado Boudou has blamed recent rains for the price rise, saying ranchers are keeping their animals out grazing on the lush Pampas pastures instead of sending them to market.
    President Cristina Fernandez, who enthusiastically promoted pork as an alternative to beef by comparing it to Viagra last month, also pointed a finger at the weather, but took a pop at ranchers too.
    “It’s true, beef’s gone up. It’s gone up a lot, as has the price the farmers are getting,” she said this week, drawing an angry response from farm leaders, who said short-sighted government policy and middlemen were the real villains.
    The government has curbed exports on-and-off for years to keep a lid on the cost of the nation’s favorite food and the current spike in prices has raised the specter of fresh disruption to shipments from the country, a leading exporter.
    But as beef becomes increasingly unaffordable, some Argentine shoppers might be taking the president’s pork recommendation a lot more seriously.

Farm fight gives Argentine newspapers plenty to chew on



Argentine farmers’ decision to resume their anti-government protests dominated Sunday’s newspaper editorials, with some commentators saying the seemingly never-ending conflict over soy taxes risked spilling into political turmoil and even violence (Joaquin Morales Sola in right-leaning La Nacion).

Most agreed the conflict’s resurgence was down to last week’s surprise announcement by President Cristina Fernandez to share the soy tax revenue with the provinces, which critics see as an election ploy ahead of a mid-term vote due in June. Farmers took as proof she is unwilling to lower the levy.

The Perpetual war of the Pampas


tractor-protestIt all looks very familiar. Argentina’s rebellious farmers are threatening to go back to their highway protests, the government is refusing to cut export taxes on soybeans and another showdown in Congress is on the horizon.

If ruling party lawmakers’ continue to refuse to take their seats and allow a vote on an opposition-led bill to cut the taxes, farmers will have a good excuse to resume road protests and a freeze on grains sales to starve the state of revenue.

The Devil is in the details


Numbers, or rather the lack of them, are the latest gripe of Argentina’s disgruntled farm sector.

Statistics published by the government for years have been disappearing since the Agriculture Secretariat ceded control of the country’s multibillion-dollar grains and beef trade to another state agency, the ONCCA, earlier this year.

Argentine farmers return to sabre-rattling



It didn’t take long for Argentine farmers to lose their contented glow after defeating the government over a tax hike on soy exports earlier this year.

The calm that descended on the Pampas plains in the aftermath of the four-month farming conflict was predictably short-lived, and the disgruntled farmers are rattling their sabers again. While they haven’t said what they plan to do, the farm leaders have promised to announce their next move in the coming days.

Argentine farmers say government has gone too far


Every time it looks like relations between Argentine farmers and the governmepampas_plains.jpgnt have hit rock bottom, they get worse.
Exasperated farmers have blocked ports, parked tractors across highways and refused to send their cattle to market in protest at a string of government measures.
They even held a mass prayer rally, hoping the nation’s patron saint might help them resolve the three-year-old row.
This time they have called a two-day strike in protest at an export tax hike that targets their most lucrative crops, soybeans and sunflowers.
Officials say everyone should benefit from the grains bonanza, not just the countryside, which has historically fought with the government in Buenos Aires over the spoils of the country’s farming riches.
They say there will still be an ample profit margin even with the new tax increases.
But farmers say the government has gone too far, and will end up shooting itself in the foot by discouraging the production of the very goods that are swelling state coffers.
Argentina has recovered some of its former fame as the bread basket of the world in recent years, but the rapid rise in export duties that has accompanied soaring global prices means few farmers are celebrating in the famous Pampas plains.

“The worst thing about all this despondency, is that we’re losing a culture.” one farmer told daily La Nacion. “I honestly don’t know if there’s any future in farming for my children.”